Chapter 14- Strategic Pricing Methods

Front 1

Cost-based pricing methods

Back 1

Determines the final price to charge by starting with the cost

Front 2

Competitor-based pricing method

Back 2

Set a price to reflect the way they want consumers to interpret their own priced relative to the competitors' offerings

Front 3

Value-based pricing methods

Back 3

Include approaches to setting prices that focus on the overall value of the product offering as perceived by the consumer

Front 4

Improvement value

Back 4

Represents an estimate of how much more (or less) consumers are willing to pay for a product relative to other comparable products

Front 5

Cost of ownership method

Back 5

Determines the total cost of owning the product over its useful life

Front 6

Everyday low pricing (EDLP)

Back 6

companies stress the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer

Front 7

Odd prices

Back 7

Prices that end in odd numbers, usually 9

Front 8

High/low pricing

Back 8

Relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases

Front 9

Reference price

Back 9

The price against which buyers compare the actual selling price of the product and that facilitates their evaluation process. The "regular price" or "original price" compared to the "sale price"

Front 10

Price lining

Back 10

When marketers establish a price floor and a price ceiling for an entire line of similar products and then set a few other price points in between to represent distinct differences in quality

Front 11

Marketing penetration strategy

Back 11

Firms set the initial price low for the introduction of the new product or service

Front 12

Experience curve effect

Back 12

When the unit cost drops significantly as the accumulated volume sold increases

Front 13

Price Skimming

Back 13

Starts off at high price and gradually lowers

Front 14

Pricing Tactics

Back 14

Offer short-term methods to focus on selects components of the five C's

Front 15

Markdowns

Back 15

The reductions retailers take on the initial selling price of the product or service

Front 16

Size discount

Back 16

The larger the quantity, the less the cost per ounce. Most common implementation of quantity discount.

Front 17

Seasonal discount

Back 17

Price reductions offered on products and services to stimulate demand during off-peak seasons

Front 18

Coupons

Back 18

A discount on the price of specific items when they're purchased

Front 19

Rebates

Back 19

Manufactures issue a refund

Front 20

Leasing

Back 20

Consumers pay a fee to purchase the right to use a product for a specific amount of time

Front 21

Price bundling

Back 21

Selling more than one product for a single, lower price

Front 22

Lender Pricing

Back 22

A tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store's cost

Front 23

Seasonal Discounts

Back 23

B2B pricing tactic where an additional reduction is offered as an incentive to retailers to order merchandise in advance of the normal buying season

Front 24

Cash discount

Back 24

B2B pricing strategy where an additional reduction that reduced the invoice cost if the buyer pays the invoice prior to the end of the discount period

Front 25

Advertising allowances

Back 25

B2B pricing tactic- Offered to retailers if they agree to feature the manufacturer's product in their advertising and promotion efforts

Front 26

Slotting allowance

Back 26

B2B pricing tactic-Offered to get new products into stores or to gain more or better shelf space

Front 27

Quantity discounts

Back 27

B2B pricing tactic-Proving a reduced price according to the amount purchased

Front 28

Uniform delivered pricing

Back 28

B2B price tactic- Shipper charges one rate, no matter where the buyer is located

Front 29

Zone Pricing

Back 29

B2B price tactic- different priced depending on the geographical delivery area

Front 30

Loss leader

Back 30

Lowering price below the store's cost

Front 31

Bait and Switch

Back 31

A store lures customers in with a very low priced item and aggressively pressures them into buys a higher-priced model

Front 32

Predatory pricing

Back 32

When a firm sets a very low prices for one or more of its products with the intent to drive its competition out of business

Front 33

Price discrimination

Back 33

When firms sell the same product to different re-sellers at different prices; usually, larger firms receive lower prices

Front 34

Price fixing

Back 34

The practice of colluding with other firms to control prices

Front 35

Horizontal price fixing

Back 35

Occurs when competitors that produce and sell competing products or services collude, or work together, to control prices, effectively taking price out o the decision process for consumers

Front 36

Vertical price fixing

Back 36

Occurs when parties at different levels of the same marketing channel agree to control the prices passed on to consumers